Week 4. Nothing happened. Appraiser could not produce the appraisal report. Lender agreed to extend rate lock at no charge.

Week 5. Appraisal report finally came. The appraised value was about 20% less than what Zillow shows but it would not affect my ability to refinance. Underwriter approved the loan.

Week 6. Scheduled document signing. The lender’s contracted settlement agent sent over a notary to my office. I signed the documents in front of her. She would then forward the whole thing to the settlement agent by FedEx.

My overall experience with the lender National Mortgage Alliance is positive. The final closing statement matched the rate quote I received initially. There is no bait and switch. The loan advisor is accessible and responsive. My e-mails were replied within hours. When I called, I often got to speak to her, which I couldn’t when I worked with the mortgage broker I used (90% of my calls went to voicemail).

I also learned through this mortgage refinance process about the business model of a direct lender. I will write about it in another post in the future.

Comments

I’ve been in the middle of refinancing my mortgage, so I’ve been following your refinancing “saga.” OK, it’s not really a saga. It’s not like you crossed the plains in a covered wagon. Here’s my own saga – I mean story …

I had 10 years left on my 15-year 5.25% mortgage. The balance was $98K. I tried calling National Mortgage Alliance but couldn’t get through to a live person. I finally left a message but no one returned my call. According to their web-site, the best no-cost rate for my situation was 4.875%. Presumably, this was due to my relatively low loan balance. When I entered $200K for the loan amount, I was offered the same 4.5% rate that you received.

So instead, I went with Fremont Bank (fremont.bank), a local bank servicing California, Nevada, and Oregon. They specialize in no-cost loans. Their 15 and 30 year rates are prominently displayed on the front page of their website. They’ve been quite competitive over the past 5-10 years, so their website is a good source of quick information about national mortgage rates.

At the end of April, Fremont Bank’s 15-year no-cost rate was 4.625% (their 10-year rate was also 4.625%; their 30-year rate was 4.99%). However, there was a potential problem. There was no same day rate lock for new customers and I hadn’t refinanced with them before. More so, I had to pay a $395 application fee. This fee would be refunded if and only if the loan funded. I was pretty confident the loan would fund, but I was taking a chance that the rate would remain low (this was the main reason I haven’t used them before). I was told that 2-3 weeks were typically required for loan approval and rate lock.

I submitted my on-line application on Wednesday April 29. I received a confirmation call-back the following day (April 30) with a request for documentation (pay stubs, tax forms, bank accounts). I was ready with the documentation and faxed in everything that day. I received a loan packet in the mail on Saturday (May 2), and signed/faxed the necessary information that same day. On Thursday, May 7, eight days after submitting my application, I was informed that the loan was approved and was asked if I wanted to lock in the 4.625% rate. I said yes. I signed loan papers the following Monday (May 11) when a notary came to my house. Although she was a contractor, she was quite familiar with the process and was able to answer a lot of logistical questions. She even had the phone number to my local credit union memorized. I faxed in a subsequent document (request for tax returns) the following Saturday (May 16). The assessment of my house was invisible to me and there were no issues associated with my request to forgo an escrow account.

I received a refund check of my $395 application fee on Friday, May 22. The application fee won’t hit my credit card until mid-June, so I actually come out about 50 cents ahead in interest.

I don’t have on-line access to my previous mortgage institution so I have no easy way to determine if the loan balance has been paid. I stopped the automatic withdrawal that was scheduled for June 1. I sent an interim interest check to the new institution over a week ago but so far it has not cleared my checking account (which has me a little worried). Automatic deductions won’t begin until July 1. Everything seems to be on track but I won’t consider the matter closed until July 1.

Overall, the process went extremely well. I’d recommend Fremont Bank to anyone living in California, Nevada, or Oregon. They even contacted my home owners insurance company to have my annual insurance forms sent to them. They sent me a postage paid envelop for my interim interest payment. I had to do next to nothing.

One final note. In late April I called my previous institution to learn if they could match the Fremont Bank rate. I was quoted a no cost rate of 5.125% (a notch below my existing rate), and a no points rate of 4.625% with “only” $3K in fees. They asked me to fax them the quote from Fremont Bank, which I did. However, no one called me back. Two weeks later I got a call from them that essentially said, “please don’t leave us.” I was a little irked by their call since they didn’t bother to call me back, even to say that they couldn’t match the new rate.

@Shawn – Congratulations and thank you for sharing your story in such details. You started one week after I did and finished two weeks sooner. Fremont Bank did it very efficiently for you. If you’d like to confirm everything is done as expected, you can call your previous lender and ask for the payoff date and amount. They may even owe you a little bit of money because the payoff calculation can include a couple of days of interest as a cushion. Also call your new lender and ask them when the loan was made effective and confirm the principal, rate, terms and everything.

You did take a risk between your application and approval. The pricing for a short lock was much more favorable than a 30-day lock. That’s why Fremont Bank was able to give you a lower rate. The broker I worked with before also wanted me to go that way — float until the loan is approved, then lock and close — but I opted for a confirmed lock with NMA. According to the post I linked from Mr. Mortgage blog, that floating strategy backfired for many people lately.

Sorry about the mishap to the other post. It was released prematurely. I think my loan will fund on Tuesday. I will confirm everything afterwards.

I’ve been a long-time follower and occasional commenter. Have a mortgage question that you might help me out with.

I almost picked out a lender, but just found out that the bank gives itself the “ability to require repayment in full before the scheduled maturity date”. They claim that this is standard practice. Do you know if that’s true? I’m a little concerned that this makes my “fixed” rate an illusion: if rates go up sufficiently, they will call the loan and I’ll have to refinance before I planned to, at a higher rate. Am I misunderstanding something? It’s a fairly reputable bank (ING Direct).

OK, never mind, it looks like a case of miscommunication or poorly informed sales rep. They cleared it up for me, said that they can only demand full payment in case I’m behind on payments or other problems (as I would expect it to be), but not just because they feel like it. Sorry to have bothered you Great blog!

TFB – I am working with NMA (thank you for pointing me to them). I locked in the rate 7/15, signed the application and faxed it and the necessary documents back 7/16.

I am wondering how long it would take, assuming there is no need for an appraisal, to close? I am hoping to close before the month of July is out and hence saving by having to pay interest for only a few days.

Robert – Thank you, I’m happy to hear that. There’s not much of a difference in terms of $$$. If another bank will service your loan before you make the first payment, pushing out the first payment due date to October will give you more time to let everything settle down. Otherwise it doesn’t matter.

I have a broker that I’ve been working with for two months. He requested a list of information he said was required for the refinance. I gave that to him but he keeps requesting more financial information. Some of it seems irrelevant to the loan. It’s starting to get on my nerves and some even seems false. For example, he claims that the S.A.F.E. Act requires the lender to have access to some information from me that I don’t think is relevant? The broker states that this is a no-cost loan but I’m wanting to back out because I don’t feel good about it. I’ve signed disclosures, but am I obligated for any fees? –he locked the rate and had an appraisal. But I don’t remember signing anything concerning that part.

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